US jobs data in focus, markets optimistic

European stocks posted modest gains as traders awaited US jobs numbers due later Friday that will test optimism over whether the Federal Reserve’s tightening cycle is nearing an end. 

The Stoxx 600 added about 0.2% to its strongest week since March. Automakers fared best, with BMW AG rising after increased sales of fully electric vehicles boosted margins. A.P. Moller-Maersk A/S, a bellwether for global trade, slumped more than 7% after saying it’s cutting at least 10,000 jobs to shield its profitability.

US equity futures slipped, with Apple Inc. lower in premarket trading after revenue from the greater China region disappointed investors. The mood was brighter in Asia, with MSCI’s regional benchmark gaining more than 1% and headed for its best week in two months. 

Attention is turning to US nonfarm payroll data due later in the day for further conviction on the Fed’s rate path. Bloomberg Economics expects the pace of hiring to slow to less than half of September’s strong gain.

“A decrease in job numbers may signal a loosening of labor conditions, which tend to weaken faster than they tighten,” said economists at Rand Merchant Bank in Johannesburg. “This could also challenge the Fed’s view of keeping interest rates high for longer.”

Data released ahead of payrolls showed US labor productivity advanced by the most in three years, helping to alleviate the inflationary impact of recent wage growth.  

A Bloomberg index of the dollar slipped for the third session, set for its steepest weekly decline since mid-July. Treasury yields ticked higher, with the 10-year at 4.67%.

UBS anticipates the 10-year yield will fall to 3.5% by June next year, as the Fed shifts its attention from rate hikes to rate cuts, according to Solita Marcelli, chief investment officer for Americas, at UBS Global Wealth Management. “The improving outlook for a softish landing for the US economy should also provide a positive backdrop for equities,” she said.

Others hold a more cautious view. Hedge fund K2 Asset Management predicts that benchmark 10-year Treasury yields will rise back to 5% — from 4.66% — while Franklin Templeton says they could peak at 5.25% — a level last seen in 2007. Barclays Plc co-head of global markets Stephen Dainton said it is “very unlikely” the Fed is done tightening policy.

Oil was set for a second weekly loss as the Israel-Hamas war remained contained and clouds appeared on the demand horizon. Gold headed for its first weekly decline in four. Bitcoin fell Friday after Sam Bankman-Fried was convicted of a massive fraud that led to the collapse of his FTX exchange.

Key events this week:

• Eurozone unemployment, Friday
• US unemployment, nonfarm payrolls, Friday
• Canada employment report, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.2% as of 8:15 a.m. London time
• S&P 500 futures fell 0.1%
• Nasdaq 100 futures fell 0.3%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index rose 1.1%
• The MSCI Emerging Markets Index rose 1.3%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro was little changed at $1.0632
• The Japanese yen was little changed at 150.35 per dollar
• The offshore yuan was little changed at 7.3218 per dollar
• The British pound was little changed at $1.2197

Cryptocurrencies

• Bitcoin fell 0.9% to $34,589.64
• Ether was little changed at $1,803.59

Bonds

• The yield on 10-year Treasuries was little changed at 4.67%
• Germany’s 10-year yield was little changed at 2.72%
• Britain’s 10-year yield declined one basis point to 4.37%

Commodities

• Brent crude rose 0.4% to $87.21 a barrel
• Spot gold rose 0.1% to $1,988.07 an ounce

This story was produced with the assistance of Bloomberg Automation.